According to a source in Ramallah on Wednesday evening, Israel has relented [under pressure, and temporarily] and is releasing tax revenues due to Palestinian Authority [PA]. This money is expected to be in bank today [Thursday], so that PA salaries can be paid this month.
This is despite the Palestinian reconciliation deal that was finalized by a public ceremony in Cairo on Wednesday.
It was the announcement of Fatah-Hamas reconciliation a week ago Wednesday [27 April] that inspired the Israeli decision, announced by Israel’s Finance Minister Yuval Steinitz on Sunday 1 May and backed by Israeli Prime Minister Benyamin Netanyahu to “freeze” transfer of tax revenue collected at Israeli ports on behalf of the PA — money which Palestinian Authority Minister Salam Fayyad announced was needed for payment of May salaries to nearly 200,000 PA employees in government ministries and security services.
The Israeli decision was reportedly questioned by the American government.
The U.S. has said that its contributions to the PA will continue for the moment, but will be reviewed after formation of a new PA cabinet in which Hamas is asking for some key ministerial posts. Financial arrangements will be reviewed, U.S. officials have indicated, after examination of any new Palestinian post-unity government.
Palestinian statements — including earlier suggestions from Fayyad himself — are that a new PA government will be composed of “technocrats” selected on the sole basis of who can best do the job.
Problems would certainly arise, however, if some of these “technocrats” just happened to be affiliated with Hamas.
This is a story of multiple uses of pressure.
Haaretz reported that the “world” [meaning Quartet Special Envoy Tony Blair who met Netanyahu on Tuesday 3 May, the current British Prime Minister who met Netanyahu on Wednesday 4 May, and American officials] was pressuring Israel to release the money, at least this time, at least for now, pending expected Palestinian political announcements.
The report in Haaretz, here, by Barak Ravid, said that “The international community is pressuring Israel to transfer NIS 300 million of Palestinian tax money to the Palestinian Authority, despite the reconciliation agreement signed by Fatah and Hamas yesterday in Cairo. Both United States Secretary of State Hillary Clinton and Quartet envoy Tony Blair have spoken to Prime Minister Benjamin Netanyahu and requested the funds be allowed through. ‘The money is Palestinian money so it must be transferred. That is a quartet position. Hillary Clinton made the same point’, Blair told Haaretz. ‘I think what happens when the new government comes to power is another thing, but at the moment Salam Fayyad is the prime minister and the arrangements are what they were always’ … The State Department confirmed to Haaretz that Clinton spoke to Netanyahu on the Palestinian reconciliation and related developments”.
The same Haaretz story has reported that “Behind closed doors, [Israeli Defense Minister Ehud] Barak was reported describing the delay as ‘capricious’.”
After the decision — and probably as a consequence — it was announced that U.S. President Obama has given Israeli Prime Minister Netanyahu a date at the White House, on 20 May [during Netanyahu’s planned and much-touted visit to Washington to address the U.S. Congress, again.]
Considerable American pressure has reportedly been applied to Netanyahu to come up with his own peace plan — to be announced during the trip to Washington, and possibly also earlier to his constituency in Israel.
Netanyahu’s support for reported Israeli decision to withhold the transfer of tax revenue to the PA because it might somehow go to Hamas has now resulted in his date with Obama at the White House.
And, the spectre that not only tax transfers but also all other donor payments to the PA would be withheld if Hamas get any posts in any new PA government — without major change of public posture by Hamas — is being applied as weighty [though humiliating, while to be maximally effective pressure should never be humiliating] leverage on Palestinian politicians.
The tax refund payments are an outcome of arrangements made in the Oslo Accords signed between Israel and the Palestine Liberation Organization (PLO) in 1993. These tax refund payments were supposed to finance the costs of the Palestinian Authority (PA) established in the occupied Palestinian territory under the Oslo Agreements — but now make up only one-third or one-fourth of the Palestinian budget [depending on how you calculate the budget].
Donor funding provides another one-third or so of the PA budgetary needs — including particularly but not exclusively all salary and pension costs for some 180,000 PA employees in the West Bank and Gaza (most of those ordered to stay home and not work for Hamas) and security forces in the West Bank. Some one million people are estimated to be dependent on these salaries.
Israel withheld these tax payments at various other moments, notably after Hamas won the majority of seats in the PA Parliament, the Palestine Legislative Council, in January 2006 elections.
International donors withheld all contributions — though the EU set up a special funding mechanism to deal with critical sectors — and did not restore funding until Palestinian President Mahmoud Abbas created a Hamas-free government in the immediate aftermath of a Hamas rout of Fatah/PA Preventive Security Forces in Gaza in mid-June 2007.
PA employees were not paid for a year and a half — and do not want to imagine a return to the difficulties they faced in that period. In that time, the PA arranged for its employees to take bank loans [but the PA did not pay the interest costs, or monthly payments due on the loans] which were put on the responsibility of the employees.
It is very hard to imagine how the PA would meet its operating expenses if Israeli and international funding is cut off all at once now.
The Haaretz story by Barak Ravid — apparently based on his interview with Tony Blair — is also reporting that “Blair said that in the future the international community would find it difficult to assist the new Palestinian government if it fails to accept the conditions of the Quartet ? recognizing Israel, abandoning terrorism, and committing to agreements previously signed between Israel and the Palestine Liberation Organization … ‘It is easier for the international community to deal with the government if it adheres to those principles. If not, it will complicate the situation’, he said. ‘I will still do everything I can to improve the living conditions of the Palestinians in the West Bank, Gaza and East Jerusalem. The donor support from the EU and the U.S. comes under very clear conditions’. Blair went on to say the United States has laws that would not allow the transfer of funds to the Palestinian Authority if the new government fails to abide by the Quartet’s conditions. ‘That is why it is important that the new government is very clearly constituted’, he said. ‘The Europeans will still expect the Quartet principles to be upheld. It is a difficult situation, we want Palestinian unity but in terms that promote peace. For us in the international community it is very simple ? we have certain principles ? recognition of Israel and renunciation of violence. Those principles stay. We will judge the new government by its conformity to those principles’. Blair said current security arrangements in the West Bank must remain in place”…